For example, one night around 9pm a man knocked on my door and asked if I wanted to donate to a charity that preserves rain forests and so on. I’m a bit of a greenie, so I was ready to give him some money but he refused the cash. “We are looking for a donation that we take monthly – as a regular thing”. I explained to him that I was travelling next year and had no idea what my financial situation would be like, but I would be happy to donate as a once-off thing. He refused again and gave me same story about the “monthly commitment”. It was pretty obvious that he was getting a cut of the monthly commitment, and as a result wasn’t interested in my genuine donation. He left empty handed and I walked back inside frustrated with the world.

Ever since a friend asked me to donate to a charity quite some time ago, I’ve given it some thought, and to be honest I ask myself “what is the point”.

For instance, charities supporting cancer research are just misguided, and wasting money on research for a wonder drug, when clearly the solution is a good diet and a healthy lifestyle. Doctors receive essentially no training on nutrition, despite it being the most important thing in our lives, and good nutrition being the most plausible way to “beat” cancer.

I plan to pick some well thought out charities that I believe strongly in, and donate to them only. I think it’s a better way of going about making donations.

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Donating to Charities

• Don’t get tied to a physical location
• Work as little as you can
• Actually do what you want to do in life

This is all good and well, but you really need to financially support the lifestyle that you want. If you have read any of my other posts on this site, it’s probably obvious by now that I’m not a very materialistic person. I’m no Amish, but I’m not very driven to have a lot of “stuff” either.

By not having the need to own a lot of posessions, I personally have a huge advantage – I can get away with earning less in order to have the lifestyle that I want. Of course if you do have a lot of needs by way of posessions, it’s all possible, you just need to raise more income.

How do I plan on doing this? There are plenty of ways, but essentially I am working on projects that require little to no work from myself after the initial setup. I’m not quite at the “outsource everything” stage, so I’m doing a lot of work myself (since I actually enjoy it), but maybe one day.

For instance, I run a website called “Eco Update“. The idea of the site is to aggregate content – basically it pulls the relevant content from other sites and then displays it on mine. The aim is to collect content on a few related topics, making it a “hub” of eco friendly/green living news and information. From the income generating point of view, the site also features Google Adsense advertising, and generates a minor income stream for me which requires little to no effort after the initial setup.

It goes to show that while you can make smart investments to generate passive income, there are also other little projects that can do the same for next to no cost. Some people like me create websites and use affiliate programs and advertising banners to generate income while others will start a dropshipping business. There are plenty of options and you are only limited by your imagination.

Think about it, then do some planning, and make it happen. Start small if need be and aim for the stars.

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Financial Self Sufficiency

Upon arrival to the conference I was given a HP netbook – a HP Mini 2140 to be precise. I’m a massive geek and I love this thing (I’m typing this blog entry on it right now).

I just can’t believe how image driven Queensland is. I know everyone, everywhere is somewhat driven by image, but never before have I seen people so driven by image that their lives evolve around it. Talking to Queenslanders, watching them walk around on the streets, seeing the numerous mini trucks, heavily modified v8′s and turbo cars everywhere, not to mention people riding choppers, etc, etc – it’s just a state driven by looking good – at any cost! They are all trying to keep up with eachother, even though only few of them can afford to.

Obviously this sort of thing happens everywhere – certainly in Adelaide where I live, but just not on this scale.

While I’ve been here I’ve also had some time to catch up with my sister who lives in Queensland too. It’s been great to catch up with her, and finally meet my niece – who is just awesome.

Spending time with my sister and her family has once again reinforced my opinion that “things” and ”stuff” is just so unnecessary. I completely understand that people need their hobbies, they need their few luxuries, but at what cost?

This isn’t a dig at the state at all – it’s beautiful up here… In areas anyway. I’ve considered the idea of moving up here a fair few times now (although never seriously enough to talk with my fiancee about it). I just don’t know if I could keep up with everyone else. I really think that to survive in Queensland you need to be very career drive, have very well of parents, or be happy to live a life of eternal debt.

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Queensland’s Overindulgence

“What cars would you buy?”, “Where would you buy a house and what sort?”, and so on. I was talking to the guys at work about it last week and I’m convinced that nothing “amazing” like winning 90 million will ever happen to me, but I take comfort that along with that I don’t believe anything terrible will happen to me in my life either. I’ll just ride the wave, enjoy it to the max, and then die one day.

Australia is the new America. Rampant consumerism, and while I like my “stuff”, it’s insane to think that my life could be that much better just with more money. In fact you only have to look to the “stars” to see how the money ends up owning them in the long run.

For instance – I am relatively healthy, in a good career and with my fiancee who makes me so very happy. I am lucky enough to know my passion – bikes. I love the outdoors and my freedom. Obviously I’m not going to say that money wouldn’t make some of these things easier to acquire – bikes for instance – I could have hundreds if I was loaded, but what is the point? Where is the satisfaction in having a few hundred bikes when in reality you will only ever ride maybe 5 of them regularly? Being rich is a false economy. I’m not going to love my fiancee any more if I’m rich, I’m not going to get any healthier if I’m rich, and I’m not going to feel any more free if I’m rich either.

I’m sure if you think about it in your life too, the benefits will be limited as well.

Winning a lump sum of money like this will just throw all frugality out of the window, and before long you will be “two steps back”.

Maybe I’m just sour about others winning, maybe I’m in denial, but I honestly think that people bank on money (no pun intended), that bit too much. If money is the thing that will make you the happiest in life, it’s time for a reality check. There is so much out there to make you smile, make you laugh, or give you a rush that doesn’t cost a cent!

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90 Million Dollars!

Through the later school years and a year or so after leaving school, I was finding my place in life. It was hard to see mates getting handouts from their parents while I had to work my ass off to get anything, and even then I couldn’t compete in their world.

Nowadays though, I see that everything I’ve been through has taught me some serious lessons. Small lessons like appreciation for money, but more importantly knowing what is actually important to me.

Time after time back in the day, I’d be annoyed that I didn’t have something that one of my mates had, when in reality although it would be nice to have, it wasn’t really that important. (Eg. a mate gets a nice new skateboard from his parents, but I can’t afford one so I don’t get one – in reality I was never into skating anyway). Nowadays, it’s financially a lot easier for me to buy something just because the next person has bought it, in “keeping up appearances”. I used to do this, but now I’m over it – as far as I see it, it’s just another form of competition.

Buying a nicer car, renovating the house or moving to a more upmarket suburb. Even just the places that you go out to dinner. It’s fine when you’re making the choices for yourself, but it’s crazy if you’re just doing something for first place in the game of life.

I know a couple that live well outside of their means, just to try and keep up with the rest of their family. The whole family competes constantly. Houses, cars, TV’s, computers, and now children. You name it, they’ll all try and outdo each other. It’s sad really, because when they actually want to do something, they can’t afford it or don’t have the time, because they commit so much of their resources to their competitive lifestyle. They end up living someone else’s life and not the life that they truly want to live.

I had a (cross country) mountain bike race on yesterday. My first race since last year and in a higher class than before. It was a real challenge for me, but I realised a lot of things while I was racing. A fair few of them unrelated to this post (things about technique, etc) but most importantly that I wasn’t really that interested in winning. I’m more of an “I wonder how fast I am” racer. It’s a personal challenge more than anything else for me. Sometimes when it comes to sport I wonder if I should try and be more competitive, but really, why? For the kudos of other people? I just want to go out and ride, and do the best that I can. If my best is first place, great, if it’s 20th, fine. I came 7th on the weekend.

I’m happy with where I’m at. Sure, a bit of competition in sport is healthy, but to me not being too competitive in life means staying true to what you actually want, rather than living a life of competition between friends, family and colleagues. It means you can live the life that you want, not what others want you to live. I couldn’t think of a better way to live really..

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Competitive nature

To a lot of people, us Gen Y’s are just plain annoying. I’ve read about how Gen X’s are probably the most sour about everything. They are a generation with the biggest mortgages, transport and living costs. As it stands, they have the most to gain from Australia’s economic “slowdown”. (Makes me laugh when they use the term slowdown). Falling interest rates and petrol prices are set to benefit the Gen X’s the most. Essentially, they have had a “hard life”. They’ve worked hard to get nowhere in their eyes, while the Baby Boomers get rich from specufesting (speculation investing), and the Gen Y’s seem to get all of the good jobs while treating their employers terribly.

What the majorities don’t realise though, is that the Gen Y’s are both the Baby Boomers’ only hope to retire on a healthy sum of money, and the best way to keep the Gen X’s in a property that is actually worth something at the end of the day.

Unfortunately what most also don’t realise is that in Australia, the Gen Y’s are the equivalent to a subprime investment. The majority have a huge HECS debt, credit card debt, have little to no savings as they haven’t been earning for long at all (due to studying), are quick to sign any contract (car, laptop, mobile, internet, pay-tv) and so on. Financially… woeful!

Work is becoming harder and harder to find for a lot of Gen Y’s. I know very intelligent people who have attained high grades in university, and some two years after finishing uni are still working casual at a pub. If you’ve got a job, great, but if you don’t, times are already tough.

Now granted these are generalizations.. I also know a lot of Gen Y’s that are good savers, have very safe jobs, and are financially “on track” (whatever their path may be). I also know a lot aren’t though.

None of this really concerns me. What is the big deal about having a twenty grand debt? Sure, to me it seems like a waste of money to me, paying interest on that money, but it’s not a massive amount of money and it doesn’t affect me directly if someone else wants to do that.

What does concern me is this big juicy First Home Owners Scheme (I imagine they don’t call it a scheme for a reason). $7000 FHOG, $7000 “Boost”, $4000 from the SA Government (different schemes in different states), and an extra $7000 if you build. $25000 in free money!

“House and Land Packages from $300,000. Take advantage of the First Home Owners Grant and low interest rates. Rent money is dead money!”

Although loans are becoming harder to get, things haven’t hit home in Aus yet. Notice how there’s a for sale sign in just about every street of the country? They are the smart people. Well they are the people that are smarter than most. The really smart people sold up at the peak a while back, but these ones are happy to cut their losses and get out now before anything worse happens. The Baby Boomers are selling. The Gen Y’s are buying (and allowing the BB’s to retire early).

The FHOG is keeping the housing market afloat in Australia. Practically every Baby Boomer in the country is telling their kids to buy. Interest rates this, FHOG that. Despite their kids only having a few grand in savings, and a job that they have only worked for 8 months. “Get in before the next boom”. After all, “house prices don’t fall, they double every ten years in Australia”……

Now believe me or not, I’m going to say this. From an economic point of view, it is widely accepted that house prices will fall in Australia. It’s happened in history (as above), it’s happened all over the world, and it happens in any other investment market. A LOT of people have something to lose by this happening, hence the naysayers. I won’t go into the specifics because that is a massive rant in itself, but if you want to do some reading check out bubblepedia.net.au.

So we’re going on hypotheticals, because you’re probably skeptical that this will never happen, but lets just say it does…

The Gen Y’s all buy up on housing from the “smart” Baby Boomers. The BB’s are selling their investment properties due to a looming house price crash. First Home Owners Grant and all, Gen Y’s are buying up big, their parents are oh so proud, and celebrations are in order. Then as it happens, the “slowdown” that Australia was having turns out to be a “depression” after all. Whoops, who saw that coming? Unemployment is rife, with the Gen Y’s to go first since they have had no job loyalty in the past, and really they are just an annoying eccentric kid, right Gen X’s? They try to keep above the water for a while, try to keep paying off their loan. Maybe renegotiate with the bank and take an interest only loan for a few months while they find a new job. Rent out the house even? Unfortunately the rental market is at an all time low due to a housing surplus too (not a housing shortage as all of the developers will have you believe… coincidence?), plus all of the other unemployed people are moving back in with their parents or sharing with others.

Time for the subprime of Australia to start declaring bankruptcy. What a nice start to life Gen Y’s. Good luck getting a loan in the future with your credit status now.

But mum and dad love you, it’s a big mean world out there. It’s not your fault things didn’t go your way, nobody saw it coming. Nobody except all of the people that tried to tell you not to buy before you did.

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Unintentional intentions for Gen Y’s

My mates pull figures out of thin air. On the weekend one of them said that if he could earn $100,000 he’d be happy, and he’ll do anything to earn that sort of money… “Even work 80 hour weeks!”

But to me, I think we’ve all got it a bit wrong sometimes. Why is it, that when I earned around five grand a year working for McDonald’s, I never had enough money, yet now that I’m earning over ten times that, I still “don’t have enough money”. Well, to be honest, that last bit is a lie.. I do have enough money, but only because my lifestyle has changed. My change of income hasn’t changed my situation, but rather my change of mindset. For most people I know, and most people I don’t know, they simply never have enough money because they always spend the extra money they earn on more “stuff”.

It’s not our fault that we always want more “stuff” (it’s what we’ve been taught for a long time), but it really locks us into our working life. Put simply, I have no intentions of working for my whole life. I am working full time now while I’m “getting set up”, but later in life I hope to be able to have my wife as a stay at home mum (as that’s what she wants), and ideally I will just work a few days a week.

I think the biggest issue with being able to do this is the ongoing costs that come attached to almost everything in our life nowadays. Mobile phone contracts, Internet contracts, pay tv contracts, petrol, car rego, club membership, insurance, etc. We’re committing to more than we realise. Now obviously some things you can’t live without, and obviously most people need to spend money to make themselves happy sometimes. For instance, I enjoy using the Internet, and I spend more than most people I know on it, but it’s a genuine interest of mine. I don’t have pay tv, because I don’t really watch much TV. I feel as though I can justify that expense.

The issue is that most people don’t really think before they commit to things (eg, $99 a month on their phone), and before long they are so used to having it, they “need” it. Now when you stockpile all of these weekly, monthly, yearly financial commitments up, plus the combination of getting into the habit of buying things regularly (eg, DVD’s, clothes, even expensive food), you end up broke. (Once again, I’m not saying “you should never buy a DVD”.. Some people love collecting them, it’s their hobby. Good on them. But so much stuff is thrown at us, that we just don’t think sometimes and that pay packet ends up spent.)

I tried to explain to my mate that if he earned $100,000 a year by working an 80 hour week, he wouldn’t have the time to service his car. He’d have to get someone else to paint his house… And so on. Heaps more outgoing funds, so his massive income would be eroded.

I’m actually starting a veggie patch at the moment. I intend on having a big one eventually, but I don’t really know what I’m doing so I’m starting small. A veggie patch is a prime example of an area where time means money. Later in life, my family could end up being self sufficient, but it would take a lot of time to do that. I don’t believe you could work full time and be self sufficient. But even having a small veggie patch, and working on it after work would save a family quite a lot of money. If you work an 80 hour week it’s the last thing you’d want to do in the dark when you get home, so inevitably you’d just end up buying more from the shops. More outgoing funds that erodes the huge pay packet.

I link to a blog by a dude that calls himself durianrider. He’s pretty “out there” for a lot of people, but I admire the guy. He’s stoked on life, yet works very little and just earns enough to eat and live. Now I’m not saying that I want exactly that, but I think it’s a perfect example of the other extreme. How can one man that earns next to nothing, be so happy, yet others that earn more than most of us can comprehend be so depressed that they have to be on drugs daily, and often end up killing themselves in the end because “it’s all too much”.

It gives me hope that in a financial sense, there IS more than one way to live your life. I intend on “playing the game” for the next few years and getting setup for life, but after a few years I intend on scaling back work so I can enjoy life with my family.

I work to live, and I only ever want it that way.

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Work to live or live to work?